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Tuesday, November 8, 2011

"Goodwill" and "Reputation" of a Trademark: Is there a Difference?

It is common for people to use “goodwill” and “reputation” interchangeably when referring to the popularity of a trademark, but are these terms strictly synonyms? Law and logic, both appear to say they are distinct.

Goodwill is generated by actual availability of the good/service in connection with which the mark is used. Goodwill, which is the basis for a passing off action, requires actual business to be transacted using the mark, either by making the products available or by provision of services.

Reputation, on the other hand, is knowledge and awareness of the premium a particular a brand/mark commands although the good/service in connection with which the mark is used, may not be available in a particular territory/market.

For instance, a shoe designer like Jimmy Choo may be so popular outside the country that his reputation spills over into India through word of mouth or trade talk or interviews, although his shoes may not be available in India.

Typically, reputation is sufficient for a passing off action to be instituted for a well-known mark. In other words, actual business using the mark need not be transacted in India for the owner of a well-known mark to prevent others from using the mark. Existence of reputation, which can be established from literature, is sufficient.

This logic finds statutory sanction since the definition of a well-known mark under the Trademarks Act, 1999 does not insist on use of the mark within India. Incidentally, under Section 29(6), use of the mark in advertisements too constitutes use.